Tim Worstall is a wholesaler of rare earth metals and one of the global experts in the metal scandium. He is also a Fellow at the Adam Smith Inst in London and an writer for a number of media outlets, including The Times (London), Telegraph, The Register and even, very occasionally indeed, for... More

An interesting little piece in the London press about David Bowie: he's agreed to let his songs be used in a musical. Is this just Bowie allowing his songs to be used in a musical or does it presage the return of Bowie Bonds?

There's a starman waiting in the sky, David Bowie sang. But he need wait in the sky no longer: plans have been announced this weekend for the first full-scale musical based on the songs of the totemic British performer. A futuristic fantasy called Heroes: The Musical will tell the story of Major Tom, as well as the starman and a "young dude" called David and will have its world premiere in March at the IndigO2 venue, inside London's former Millennium Dome.

Bowie, who is one of Britain's most successful songwriters, rarely gives permission for his songs to be used and has never allowed them to be used in this way before. "We could not really believe it when they gave us permission," said Deep Singh, who wrote the musical. "His people had warned us that it was very unlikely that he would be interested and that he had been asked many times before."

A couple of things to clear up: songwriters don't get to decide what happens with their songs. Publishers do that but as Bowie is his own publisher (or at least owns it) that's trivia.

The other thing is that a musical, a successful one at least, is gargantuanly profitable for those who write the music. Sticking with UK numbers a 2,000 seat theatre in the West End might sell out at £60 a ticket leading to a roughly £1 million ($1.5 million, roughly) income to the songwriters. As Bowie did his own lyrics as well as music, and he owns the publisher, that would, pre-tax, be his. That's assuming only one company which isn't what generally happens with successful musicals: Broadway, road companies, these things beckon.

Which brings us to Bowie Bonds. These were the first of the Pullman Bond, where intellectual property (patents, copyrights) were used as the security for bond issues. Or at least the cashlows from them were. The first was the Bowie bond but similar issues were done for Ashford and Simpson, James Bown, the Isley Brothers (fascinating full details of what actually went into them here).

The full details of the Bowie Bond are a bit hazy: as far as we know the full prospectus was never published, the bonds all being bought by Prudential. Issue of $55 million was in 1997 and some say they had a 10 year maturity, others an average 10 year maturity. Some say that they were all paid off by 2007 and the royalty revenues reverted to Bowie.

The thing is, to pay off the bonds Bowie's royalties would need to have been $8 million and change a year to cover interest and principal. Which is where the possible musical comes in.

Assume that the charity one off works well. There will obviously be a clamour for it to be properly staged for a long run. Even in one city alone (which a successful Bowie musical simply wouldn't be) it would be a substantial start to creating a royalty stream, or of adding to his current one, to provide the security for another issue of Bowie Bonds.

And what the issuance of such bonds allows is that they bring future revenues into the present for the songwriter. Bowie is nearing 65 years old: but the royalties on his songs have a minimum of another 70 years to run. Tempting to bring some of that income from after your death forward to where you can still spend it yourself, don't you think?

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

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